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In Search of Manufacturing Excellence

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In Search of Manufacturing Excellence

A discussion with recently-retired middle market CEO Terry Lutz about his life, his business, and his new book.

Listen to the entire interview click here

From the moment you begin talking to Walter (Terry) Lutz, Jr., you know you’re in for some fun.  Blunt, bemused, confident  (sometimes to the point of immodesty…but then, he’s got a lot to be immodest about), raspy and opinionated, Lutz, in many ways, exemplifies the tough middle market CEO who built his or her company from humble beginnings and made it a powerhouse in its field.

Lutz is the recently-retired CEO of Signicast Investment Castings, a middle market leader in investment castings worldwide, based in Hartford, WI.  He recently published a book entitled “In Pursuit of Manufacturing Excellence: The Signicast Story,” which is part autobiography, part seminar on manufacturing and innovation, and part political treatise.  To get a sense of Lutz’s general attitude, which permeates the book, check out the cover jacket, which jauntily begins with the phrase “YES, WE BUILT IT,” sardonically referring of course to President Obama’s now-legendary statement during the 2012 campaign “You didn’t build that!”  While it’s not going to win any Pulitzer Prizes for writing, the book provides a fascinating insight into both the development of an entrepreneur and the latent resiliency and innovative competitiveness in American manufacturing, particularly in the middle market.

Let’s start with the man.  Terry Lutz, Jr., grew up in Haddonfield, New Jersey, the son of a somewhat roguish salesman for his grandfather’s company, Edgcomb Steel.   From the start, Terry was an independent spirit.

“By the time I was in sixth grade, I was pretty rebellious.  I knew what I wanted.  I knew what I didn’t want.  I sort of forced my way.”

Perhaps an incident from Lutz’s early life displays glimmers of the type of entrepreneur he would become in later life.  It involved a sailing race on the Toms River, which empties into Barnegat Bay in New Jersey, where Lutz spent many summers during his high school years.

“I’ve always been sort of a maverick,” he recalls, “and when the whole pack [of sailors] started to go to one shore (because, in river sailing, the wind is going to be better on one shore than the other most of the time), I said what the heck?  Why should I just follow the lead? I’ll try the other shore.  I went to the other shore, and the wind was so good there that they had to check when I went around the first buoy, trying to figure out how I got there - I was so far ahead.

“It was just a gut feeling.  I’d say that most of my decisions throughout my life have been gut decisions. And most of the time my gut’s been right.”

Like many entrepreneurs, Lutz was strongly influenced by his family, in this case his grandfather – although not directly.

 “My grandfather died when I was very young, probably about 4 years old, but his legacy is something that I really followed closely.

“He had taught my father many lessons, like ‘what is a customer?’  He was a visionary.  You know, he built a plant down in South Carolina, a steel warehouse, when there was nothing there, because he knew that people were going to go there, and they were going to need steel.  The stainless steel truck, the image and the service and putting the customer first.  You know, as I think I said in the book, even the truck drivers, they wore bowties, they were considered salesmen.

“So I learned a lot of those business principles and most of them came from my grandfather.  He and a guy by name of Edgecomb, they are the ones who started Edgecombe steel. So, he was an entrepreneurial guy.”

One of the consistent themes throughout the book is refusal to accept failure, refusal to be told “you can’t do that.” 

“When I was a sophomore in high school, I had already made up my mind that I wanted to be a metallurgical engineer, and I had told everybody that. Well, my Geology teacher told my mother that I was never going to be an engineer -  my math skills weren’t good enough. When I was told that, I said “What do you mean?  I’m going to be a metallurgical engineer!  Don’t you hear me?” and only mother sort of gave me a little comfort by saying ‘Hey, you can be anything you want to be.’  I learned from that. You can be anything that you want to be.  Do you really want it or don’t you?  If you really want it, go for it. And if you go for it, most of the time you end up succeeding.  If you fail, then try again.”
Perhaps because of this character trait, Lutz’s leadership of Signicast was marked by constant adaptation and innovation.  Even before Lutz and two other employees purchased the company in 1981 when he was but 37 years old, he was adept at making game-changing decisions that fundamentally altered the business.  For instance, in 1978 the then-owner of Signicast, Bill Lewis, died, and Lutz immediately decided to get out of the golf club manufacturing business which was, at the time, over 60% of the company’s sales.  He moved Signicast instead into other commercial castings, including for the petrochemical industry.  It worked.

“I have all the respect in the world for anybody that works to their limits, to what they’re capable of doing.  Even if their capabilities are very slim and very little, no worries. If you are a street cleaner, and you are really good street cleaner and you really go at it, I have respect for you.”

“Well, if you’re going to be a successful CEO, you’ve got to be a visionary, you’ve got to be able to look into the future.  Your predictions of the future won’t always be right, but you’ve got to consider the consequences of this path vs. that path, and then when you start seeing things work in a certain way, you’ve got to be able to say ‘Hey, it’s time to fold ‘em,  I’ve been holding them too long,’ and try something different.   So that is part of adaptation.  The rest of it is basically the innovation arising from my basic belief that I’m never happy with anything.  If you ask any of my employees, I’m never happy enough with things.  It’s not quite good enough, because it’s not perfect.  I’m a perfectionist, but I’m a realist along with that. But if you don’t strive for the best, then you’re going to be happy with second best, and that was never good enough for me.  I wanted to be the best.”

Many other innovations and inventions followed over the years, but perhaps the most profound change ever made by Lutz commenced in the early 1990s, with Signicast growing rapidly and profitably, seemingly firing on all cylinders.  In response to capacity constraints and customer desires, Lutz decided to completely transform the manner in which Signicast manufactured its products.  From the book:

I’d known we were good, but I’d always felt there was a better way to make investment castings.  You see, never being satisfied is one of my traits.

When [we] surveyed our customers and asked what the biggest impediments were to using investment castings, the answer was nearly unanimous:   our customers wanted improved quality, just-in-time delivery, and a lower price. Accomplishing all three at the same time was the dilemma.

I kept thinking that we should be like a chemical company and use pipes to move the product from one reactor (operation) to the next.  Why couldn’t pipes be conveyors, I wondered.

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